Wednesday, March 26, 2014

Midway-area resident wins ruling against eminent domain for proposed natural-gas-liquids pipeline

By Kayla Pickrell
University of Kentucky School of Journalism and Telecommunications

A judge ruled Tuesday, in a lawsuit involving a Midway-area resident, that a proposed natural-gas-liquids pipeline does not have the right to enforce eminent domain on Kentucky landowners.

Bluegrass Pipeline Co. “remains free to build its pipeline by acquiring easements from willing property owners,” Franklin Circuit Judge Phillip Shepherd said in his ruling. “However, Bluegrass cannot invoke the sovereign power of eminent domain to threaten or intimidate, or even suggest to landowners who have no desire to sell, that Bluegrass has the right to take their property without their consent.”

Penny Greathouse (Photo by Natasha Khan, PublicSource)
Bluegrass said it would appeal and said it has not tried to invoke condemnation power.

Penny Greathouse, who lives in the Scott County part of the Midway postal area, and also owns property in the Franklin County part, said in an affidavit that she talked to a representative of the pipeline four times and he stated that the company has the right to eminent domain but would rather not use it. The representative said in an affidavit that he only referred to a news report of another representative saying that.

Greathouse said Wednesday, “It’s nice now that you as a landowner have the prerogative to say 'no, you can’t be on my property.' People have a clearer feeling of knowing that they are not being forced to sell their property.

“I think a lot of people would have said no a long time ago had this been done prior to.”

Greathouse said she is the only board member of Kentuckians United to Restrain Eminent Domain, the group that filed the suit, to be approached by the pipeline.

Her property is located along Woodlake Road and was on the initial route for the proposed pipeline. Bluegrass was asking her to give it an easement on seven of her 700 acres to place a 24-inch pipeline under the rocky terrain and among some of the numerous lakes on the property, she said.

After she declined the company’s offer, it has moved the route so that it bypasses her farm and goes through one owned by Greathouse Farms LLC, a company owned by her husband, Teddy Greathouse. Bluegrass Pipeline argued that since her property was no longer at issue, she lacked standing for KURED to sue on her behalf.

Sign in New Haven reflects apparent views
of many landowners in Greater Midway.
Shepherd rejected that argument, saying the route could be changed again, and “More importantly, the location of a pipeline carrying highly dangerous and toxic chemicals on the adjoining property gives Ms. Greathouse a continuing real and and substantial interest in adjudicating Bluegrass’ legal right to utilize eminent domain to obtain an easement from her neighbors.”

“I was kind of thinking that they would bury this in the court system and we would never hear from it again,” Greathouse said.

Shepherd ruled that for a pipeline to have the right of eminent domain, it must be “in public service,” as mentioned in state law. He noted that the company admitted that it is not a public utility, and said it would not be servicing Kentuckians in any way.

Bluegrass argued that it would be a common carrier in public service, because manufacturing plants along its route to the Gulf Coast could tap into the line for its products. It noted that a Calvert City chemical plant had reached an agreement with Bluegrass to do that.

Bluegrass also cited a state law giving eminent domain to pipeline companies “transporting or delivering oil or gas, including oil and gas products . . . .”

Shepherd said that when “oil and gas products” were added to the law in 1992, the legislature also required gas companies “to provide services to landowners whose property was used for pipelines,” and be regulated by the state Public Service Commission.

UPDATE, March 28: The Kentucky Oil and Gas Association criticized that part and other aspects of Shepherd's ruling. For a PDF of the statement, click here.

Shepherd was the state secretary of natural resources and environmental protection in 1992. He said the power of eminent domain in a democracy “cannot be delegated to private parties without a clear legislative mandate that such a delegation is in the public interest.”

Shepherd said the threat of eminent domain has a “real and immediate bargaining impact” on landowners. Factors such as legal expenses against the company play a role in whether a landowner gives an easement to the company. “Landowners who do not wish to sell, but who may be unable to finance a legal challenge, are entitled to know that the law does not support Bluegrass’ assertion of the power of eminent domain,” Shepherd wrote.

Bluegrass representative Joe Hollier told the Midway Messenger in an email last month, “We have purchased easements for approximately two-thirds of the route in Kentucky. “We have not used or threatened to use eminent domain to secure easements for the project.”

The company is seeking easements from landowners in about a dozen counties. Based on easements recorded with county clerks, it appears to have had more success in Scott and Anderson than in Woodford and Franklin. As of last month, only one easement was recorded in Woodford and two in Franklin.

According to the U.S. Energy Information Administration, natural gas liquids are “used as inputs for petrochemical plants, burned for space heat and cooking, and blended into vehicle fuel.” NGLs can be ethane, propane, butane, isobutane and pentane.

The pipeline would transfer the liquids from shale-gas fields in West Virginia and Pennsylvania to Louisiana, reversing the flow of an existing line that runs from Louisiana to Hardinsburg, Ky.

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